Cash-thirsty Kenyans tap 5.5m loans from digital lenders

Dr Njoroge likened digital lenders to fleas for being so small, yet causing the most pain to customers by employing rogue recovery tactics, including the invasion of privacy.

“These are little fleas. Their output in terms of credit is less than 0.14 percent, that’s less than the smallest bank around, but in terms of noise and pain to Kenyans, they are at 90 percent,” Dr. Njoroge said in April of 2020.

What followed Njoroge’s rant was a process that culminated in the CBK (Amendment) Act, 2021, which placed the lenders under the watch of the apex bank.

CBK required all digital lenders to openly declare loan fees to customers while reining in unethical debt collection practices and abuse of personal information.

Digital lenders today find themselves encircled by three regulators, the CBK, the Office of the Data Protection Commissioner (ODPC), and the Competition Authority of Kenya (CAK).

Despite the tighter noose, at least 126 digital lenders under CBK’s watch had churned a cumulative 5.5 million loans valued at Sh76.8 billion between their licensing date and the end of June this year.

“As at June 2025, licensed DCPs had granted 5.5 million loans valued at Sh76.8 billion,” CBK said last week.

The dishing out of 5.5 million loans shows the DCPs are slowly rivalling commercial banks as a source for loans to households and MSME businesses.

Read:  Loans by digital lenders nearly double to Sh55.2bn

The banking sector, however, remains superior, having had 11.58 million loan accounts at the end of last year with gross loans of Sh4.07 trillion.

CBK notes that digital credit providers carry out their lending activities digitally, including USSD codes.

“Loan products include education loans, development loans, short-term personal loans, asset financing, and business loans,” CBK said.

The Digital Financial Services Association of Kenya (DFSAK) has previously noted that the sector can be credited for driving the uptake of boda bodas and financing the ownership of smartphones.

But despite the increased structuring of the sector and the entry of legislation, digital lenders are still haunted by past demons as violations remain rife even for some of the licensed players.

CAK named digital lenders as the worst offenders in consumer complaints, noting that the sector accounted for the highest jump in cases filed last year.

The DCPs accounted for 29.5 percent or just under one-third of 668 consumer cases filed by Kenyans in the calendar year, up from 19.2 percent of cases in 2023.

The instances surged despite the enactment of CBK Digital Credit Providers (DCPs) Regulations in 2022.

“Generally, there has been an upward trajectory in the number of complaints relating to digital credit concerning exorbitant interests, lack of disclosure of terms and conditions, unilateral alterations, aggressive and harsh loan recovery methods, including harassment of customers’ mobile phone contacts,” CAK said in its annual report.

A spot check by the Business Daily earlier this year established that some players were still errant in their practices even after the receipt of CBK licensing.

Chapeo Capital, which runs mobile lending apps ZKPesa, Chapeo Cash, and Chapeo Credit, were found to have been bombarding individuals with calls and text messages urging them to pressure their contacts into repaying loans.

Last month, Data Commissioner Immaculate Kassait said she had written to CBK, asking it to revoke the licenses of two digital lenders over persistent breaches of data protection laws.

Borrowers have continued to make complaints against the unnamed DCPs despite recent administrative actions against them.

Last week, CBK announced the licensing of 27 more DCPs, bringing the number of approved players to 153.

At least 547 applicants are still awaiting clearance, even as CBK tweaks the rules of the game.

DCPs and other non-deposit-taking, credit-only providers will be required to show proof of at least Sh20 million or a balance sheet of a similar size before getting CBK’s greenlight.

Some industry players have asked for this threshold to be raised to Sh50 million to clearly separate the wheat from the chaff.

Read:  Why digital lenders seek a higher Sh50m threshold for licensing

“The challenge has been that a lot of the licenses are issued to entities that are not even doing business and are just briefcase outfits,” DFSAK chairman Kevin Mutiso said.

“This would separate players that are serious from those who are not.”

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